How to Build Your Startup’s Go-to-market
By Shani Shoham, President at 2020VC
I had a meeting last week with a founder and CEO of a company who was looking for advice on building his sales team. His questions triggered this blog post.
When I joined Testim, the first thing I did was to change pricing from a self-service $99/month. QA, in our case, is usually a centralized decision making process, that, depending on the size of the organization, is usually led by a Director or a VP.
The size of the problem was in the magnitude of hundreds of thousands to a few million dollars a year so we priced the product accordingly. As we moved up the chain of commands, the discussions were more strategic and deal size was higher.
We combined top-down approach using outbound and strategic content with bottom-up users signing up to a free trial.
How to build your go-to-market
Generally speaking you can classify B2B go-to-market (GTM) into 3 models:
Self service – user signs up online, enters a credit card. ACV is usually bellow $5,000 (e.g Expensify, bill.com). Product is targeting a large market.
Tele-sales – sales process involves speaking to a rep over the phone/email/video conference. ACV is usually $5,000-$100,000 (e.g Zoom, Hubspot)
Enterprise deals – Longer and more strategic sales processes that includes an account executive going onsite. ACV is usually above $100,000.
How to figure out the right GTM?
Figure out your GTM model based on who the buyer is and who cares about the problem, the impact of the problem and how much they are willing to spend to solve it and what’s the addressable market. Also think about the size of the companies you are after.
A travel management solution, for example, isn’t likely to be a CxO decision. On the other hand, a VP Sales, Chief Revenue Officer or even the CEO would likely to have a critical role in choosing a CRM solution.
If your addressable market is F500 then:
You’re not going to be able to build a large company unless lifetime value is a few million dollars.
You’re sales cycle will likely to be lengthy and involve multiple constitutes.
You’re likely going to need to go through vendor assessment including security and compliance.
The two latter points fit well with the price point so it all fits in.
Companies, by the way, might target different segments of the market using different GTM strategies. Startups though, usually don’t have the bandwidth or the funding to deploy multiple GTM strategies. It’s expensive and lacks the focus that startups should have.
How to get to market?
If your buyer is a VP or a CxO, they are not likely to sign-up for free trials. They might signup to relevant content or attend a conference. Many times outbound is the way to get their attention.
If your buyer is an engineer or architect though they probably don’t want to talk to a sales person and prefer to try the solution out themselves.
The difference between a buyer and a user.
Many startups confuse buyers and users. Users are the folks that consume your solution. The buyer is the person whose budget pays for that. A good analogy: My daughters like Barbie. While I’m not going to play with them I’m paying for it:-)
Figure out if your sales process is bottom up, i.e the user introduces you to the buyer or top down, i.e it’s the buyer’s priority and interest but he needs the users to buy in.
Bottom-up – Heavy on inbound. Tends to be more transactional and based on feature selling (depending on how high up you climb).
Top-down – Heavy on outbound. Tends to be more strategic and requires demonstrating ROI and business value.